The Public Accounts Committee (PAC) has raised concerns over the Human Resources Development Corporation (HRD Corp)'s use of RM3.77 billion in levies collected from employers for investments, rather than solely for training development programs. This revelation came from Datuk Mas Ermieyati Samsuddin, the PAC chairman, after nine months of proceedings involving HRD Corp.
As of March this year, the investments made by HRD Corp were valued at RM3.84 billion at market value. The primary aim and function of HRD Corp is to foster human resource development, including training for employees, trainees, and apprentices. However, Mas Ermieyati emphasized that HRD Corp is not an investment institution, warning that these investment activities are risky and could lead to significant losses for the corporation.
The PAC findings also revealed a significant increase in levy collections, from RM475 million in 2020 to RM2.134 billion in 2023. This increase was due to the extension of the Human Resources Development (HRD) Act 2001, which imposed mandatory levy contributions on all industries.
During the proceedings, it was noted that unutilized levies by employers within two years are categorized as unutilized levies. However, the transfer of these levies was not presented at the Board of Directors (BOD) meeting, despite requests from board members. The HRD Corp management argued that transferring levies to the unutilized levy fund does not require BOD approval, in accordance with the HRD Act.
Mas Ermieyati also criticized the implementation of a four percent service charge on training providers, which was approved by the BOD in 2019 to cover corporate expenses without relying on investments. Although the industry opposed this charge and its implementation was postponed for system improvements, the new management in 2020 implemented the charge based on the original approval without reconsulting the BOD. Despite this service charge, HRD Corp continued its aggressive investment activities, raising further concerns about the potential risks to levy funds.
In response to these issues, the PAC has recommended that HRD Corp review the process of transferring levies to the unutilized levy fund to protect the interests of small and medium enterprises (SMEs). Additionally, HRD Corp should proactively explore alternative ways for SMEs to utilize their contributions before they are deemed unutilized levies.
The PAC's findings highlight significant concerns about HRD Corp's financial practices and their alignment with the organization's core mission. The focus now turns to ensuring that HRD Corp operates transparently and prioritizes the development of human resources over risky investments, safeguarding the funds entrusted to it by employers.
By: Kpost
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